Bankruptcy Code (Amendment) Bill 2017 Passed in Lok Sabha

Lokha Sabha by approving Bankruptcy Code (Amendment) Bill 2017 made the law more strict in order to tight the loopholes in the existing code.

With this amendment, the resolution process will become more effective and solid and to correct anomalies.

Highlights of the Bill

The bill propposed to replaces the ordiance which seeked to treat different types of defaulters at par.

The types of defaulters are wilful defaulters, defaulters whose dues had been classified as non-performing assets (NPAs) for more than a year, and all related entities of these firms from participating in the resolution process.

The bill asked for seeked a strike a balance in the trade-off between punishing wilful defaulters and ensuring a more effective insolvency process.

Defaulting promoters should be a part of the debt resolution process so that they repay the dues in a period of 30 days to make their loan account operational

Help should be offered to the promoters who had submitted resolution plans before the ordinance barred them.

Participation of asset reconstruction companies, alternative investment funds (AIFs) in the bidding process should be allowed

Individual insolvency law will be implemented in phases.Guarantors of insolvent firms will be allowed to bid for other firms under the insolvency process.

Insolvency and Bankruptcy Code, 2016

Effective from 2016, the bankruptcy law of India aims at consolidating the existing framework by creating a single law for insolvency and bankruptcy.The law abolished Presidency Towns Insolvency Act, 1909 and Sick Industrial Companies (Special Provisions) Repeal Act, 2003, among others.